Donaldson, Lufkin & Jenrette Agrees To Credit Suisse Buyout

NEW YORK — Credit Suisse Group AG is buying brokerage Donaldson, Lufkin & Jenrette Inc. for $11.5 billion in the latest deal to signal the importance of a beefed-up global financial presence.

The deal announced Wednesday would unite DLJ with Credit Suisse's investment banking firm Credit Suisse First Boston, which has headquarters in London and New York.

The combined investment banking firms will operate under the Credit Suisse First Boston name, removing from the Wall Street landscape the name of three partners who formed a research company 40 years ago and turned it into a banking powerhouse.

The transaction is the latest international marriage of financial services heavyweights and the second time this summer a Swiss banking giant has taken control of a Wall Street firm.

The deal signals further consolidation in the U.S. financial services industry. Shares of the few remaining independent Wall Street firms--Bear Stearns, Lehman Brothers and J.P. Morgan & Co.-- added to their gains on expectations of further buyouts, analysts said.

Observers said the Credit Suisse proposal differs from UBS' purchase of PaineWebber in that Credit Suisse and DLJ both have strong footholds in similar areas, including the market for underwriting initial public stock offerings and high yield, or junk, bonds.

A merger would ostensibly create a more powerful entity in these areas.

Merrill Lynch banking analyst Judah Kraushaar said Credit Suisse and DLJ officials are also betting that the companies can combine their expertise to tap into Europe's burgeoning securities business.

"The centerpiece of this transaction comes from imagining what the combined organization will be able to accomplish after two to three years of heavy investment spending on personnel by DLJ in Europe," Kraushaar said.

But some analysts raised questions as to whether the combination is a good fit.

"The overlaps between CSFB and DLJ are bigger [than the UBS-PaineWebber deal], which will render integration more difficult," Zuercher Kantonalbank analyst Christoph Ritschard said in a research note. "At first sight this isn't a very attractive acquisition."

Investors seemed to agree, pushing shares of Credit Suisse Group down $2, or 3.6 percent, to $53.25.

Shares of DLJ, which surged 25 percent Tuesday on rumors a buyout was imminent, rose $4.25 to $88.25 on the New York Stock Exchange.

Under the terms of the deal, Credit Suisse will pay $90 per share in cash and stock for New York-based DLJ. The transaction does not encompass various issues of DLJ preferred stock, debt securities and the tracking stock of DLJ's online brokerage DLJdirect Inc., all of which will remain outstanding.

The DLJ and Credit Suisse boards have voted to approve the offer, Credit Suisse said, though the deal still faces regulatory approval.

The new subsidiary will have more than 26,500 employees and assets in excess of $600 billion, the companies said in a statement. Analysts predicted that up to 10 percent of the workforce could be cut, however.

Joe L. Roby, chief executive of DLJ, will be chairman of the executive board of the combined firm while CSFB chairman and chief executive Allen D. Wheat will be chief executive and president.